DOJ Hasn't Actually Found Silk Road Founder's Bitcoin Yet

from the they're-still-out-there dept

With the DOJ tracking down and arresting the alleged founder/owner of Silk Road, Ross Ulbricht, it was noted that it had also seized 26,000 or so Bitcoins. However, in the criminal complaint against Ulbricht, it suggested that his commissions were in the range of $80 million -- or about 600,000 Bitcoins. You might notice the disconnect between the 26,000 Bitcoins seized and the supposed 600,000 Ulbright made. It now comes out that those 26,000 Bitcoins aren't even Ulbricht's. Instead, they're actually from Silk Road's users. In other words, these were Bitcoins stored with user accounts on Silk Road. Ulbricht's actual wallet is separate from that, and was apparently encrypted, so it would appear that the FBI does not have them, nor does it have any way of getting at them just yet. And given that some courts have argued you can't be forced to give up your encryption, as it's a 5th Amendment violation, those Bitcoins could remain hidden -- though, I could see the court ordering him to pay the dollar equivalent in restitution (though still not sure that would force him to decrypt the Bitcoins).

The other amusing bit in all of this is that the FBI's Bitcoin wallet has been identified and renamed as "Silkroad Seized Coins" allowing users to send the FBI tiny amounts of Bitcoin with public messages attached, some of which are fairly amusing -- and many of which are critical of the government and the takedown of Silk Road. Personally, I like the one that reads: "This page shows how Bitcoin is more transparent than the US government."

Kash Hill, over at Forbes (the link above) who highlighted this story, also asked the FBI about what they're going to do with all that Bitcoin. Apparently, the plan is to hold onto it for now, and then "liquidate it" after any trial is concluded, though the FBI's spokesperson admits that "this is kind of new to us." Does that mean that someday soon folks will be able to buy some Bitcoin at a government auction?

why has no one pointed out that Bitcoins as a currency have fluctuated by orders of magnitude since they started being used? Unless he never actually cashed out any of the earnings from the site, he has nowhere near $80,000,000 in bitcoins, and depending on when he cashed out portions of that, 600,000 bitcoins a couple years ago wouldn't even get you to the double digit million USDs (and there have been moments where you couldn't get even a million dollars for 600k bitcoins for that matter)

Likewise, the $1,000,000,000 number is completely stupid, and it boggles the mind that the same people who have reported on the huge fluctuations in bitcoin values can also parrot these enormous numbers without thinking about it at all.

Bitcoins aren't very anonymous. Everyone can download and view bitcoin's block chain, and track where bitcoins are moving around.

There's two possible ways to identify someone.

1. When someone buys bitcoins from an exchange.

2. When someone cashes out bitcoins at an exchange.

If someone uses their real name to buy bitcoins at an exchange, anyone can track that person's bitcoins as they get transferred from wallet to wallet. All the way to the very end when they're cashed out at an exchange again.

There's a fascinating bitcoin article by Matthew Green, about a way to make bitcoins anonymous. He proposes a new bitcoin currency called "zerocoin". It's a way to turn bitcoins into zerocoins, and then have zerocoins turn back into bitcoins without anyone being able to tell who they belonged to.

I personally don't use bitcoins. I prefer using currency with more buyer protections. I find it interesting to read about bitcoin though, and I'll possibly use it in the future when it becomes more mainstream.

The impact of Silkroad on bitcoins this time around was a seven point decline different from some years ago that the threat send Bitcoin currency into the dark.

It has come a long way since then, it is no longer a toy currency.

Because bitcoins are mostly easy to pass around without so many roadbloacks a growing number of websites is using them to pay for things, including watching videos which is a way to inflate the "popularity" of something, or chating to give the impression that some website is actually used.http://www.bongbitcoin.com/work_for_bitcoins.php

Surprisingly it does.
Ok I know this has nothing to do with the article in question is just in my mind I see "feds" and think "shite" and see some crazy person making a jet engine out of toilet paper and a grin appears in my face for some reason, don't ask why.

Everything about this trial is so extremely gray-area that I do not trust a single 'official report' about it at all.

It's like they know that they don't actually have anything on this guy except the hypothetical hitman scenario that THEY cooked up for him to fall into. Guess who else they could have captured with that scheme? Fucking anybody! Anyone capable of saying the word "Yes" without understanding or comprehending the question is just as vulnerable to the field of thought-crime as even the most heinous murderer and drug dealer.

It really only proves to me that once you're suspected of a crime, you have no rights. Not anymore at least.

Re:

One question that interests me - and that I've seen no coverage of whatsoever so far - is the legality of seizing the bitcoins of random users.

Whatever the legality of the site itself, is that legal? How about if the user in question had funded their silk road account, but engaged in no illegal activity? How is that different, conceptually, from seizing money from a PayPal account say?

Re:

Since you are comparing to another currency it's like getting BRL compared to USD. You have to specify at what time you estimated the value. 1000 USD now are worth around 2300 BRL. Last year it was along the lines of 1800. The value of the currency depends on several factors when compared to another.. Bitcoin lacks a few of the most traditional means for comparison (ie: it's not tied to any country or economy) so it's a tad harder to interpret it.

Basically, doesn't it means that people with the biggest mining power will dominate the economy with the only reason being that they waste a lot of energy and in turn create more pollution, to compute equations and maybe find bitcoins ? I know its supposed to get increasingly harder to find bitcoins, and that it has a hard limit..
But wouldn't that give some people a huge headstart ?

To me, it kinda look like taking money from a bunch of irresponsible pricks and giving it to another bunch of irresponsible pricks !

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Lucrative bitcoin mining for individuals is long over. The truth is, if you had to make the choice in 2010-2011 between mining bitcoin, or buying bitcoin, buying was the *much* more profitable option. And today you can still buy bitcoin and be an early adopter.

Bitcoin mining is crucial to supporting the network. Its not wasteful, and it supports the tech economy in the race to engineer faster mining hardware.